The collection is principally based on the personal art collection of Peggy Guggenheim, a former wife of artist Max Ernst and a niece of the mining magnate, Solomon R. Guggenheim. She collected the artworks mostly between 1938 and 1946, buying works in Europe "in dizzying succession" as World War II began, and later in America, where she discovered the talent of Jackson Pollock, among others. The museum "houses an impressive selection of modern art. Its picturesque setting and well-respected collection attract some 400,000 visitors per year", making it "the most-visited site in Venice after the Doge’s Palace". Works on display include those of prominent Italian futurists and American modernists. Pieces in the collection embrace Cubism, Surrealism and Abstract expressionism. During Peggy Guggenheim’s 30-year residence in Venice, her collection was seen at her home in the Palazzo Venier dei Leoni and at special exhibitions in Amsterdam (1950), Zurich (1951), London (1964), Stockholm (1966), Copenhagen (1966), New York (1969) and Paris (1974).

Since 1985, the United States has selected the foundation to operate the U.S. Pavilion of the Venice Biennale, an exhibition held every other summer. In 1986, the foundation purchased the Palladian-style pavilion, built in 1930
Management and attendance
Philip Rylands was appointed director of the collection in 2000. As of 2012, the collection was the most visited art gallery in Venice and the 11th most visited in Italy.

2014 lawsuit
Following the gift of works to the Solomon R. Guggenheim Foundation by Hannelore and Rudolph Schulhof of Germany in 2012, works collected by Peggy Guggenheim were removed from the Palazzo and placed in storage to make room for the display of the new works. The Schulhofs were honoured with inscriptions of their names alongside Guggenheim’s at both entrances of the museum. Their son, Michael P. Schulhof, has been a trustee of the Guggenheim foundation since 2009. In 2014, seven French descendants of Peggy Guggenheim sued the foundation for violating her will and agreements with the foundation, which they say require that the collection "remain intact and on display". The descendants also claim, among other things, that the resting place of Guggenheim’s ashes in the gardens of the Palazzo have been desecrated by the display of sculptures donated by Patsy and Raymond Nasher nearby and by the use of the burial site for fundraising parties. The lawsuit requests that the founder’s bequest be revoked or that the collections, gravesite and signage be restored. The foundation calls the lawsuit "meritless". Other descendants of Peggy Guggenheim support the foundation.